News and commentary about road pricing across the globe. Tolls, congestion charging, distance based charging, road user charging. Public policy, economics, technology and more. If Google brought you here, look down the right sidebar for references.

Thursday, 18 October 2012

Chicago congestion pricing proposal involves HOT lanes and peak tolls

Chicago may get congestion pricing, so says Illinois media. However, it isn't quite what most of us in the wider tolling/highways sector know as congestion pricing. The proposals released by the Chicago Metropolitan Agency for Planning (CMAP) are NOT to charge vehicles for using an existing untolled road or lane. There will be no cordon, area, zonal or distance based charge on existing roads. So there wont be the kind of behaviour change or modal shift seen in Singapore, London or Stockholm.

What is proposed are two new roads to be tolled, with pricing that will vary by time of day and new HOT lanes to be constructed on existing corridors. The proposal is for new capacity which will be tolled.

The new capacity will obviously mean significant travel time savings (and commensurate fuel/vehicle operating cost savings) for those using that capacity. The shift of those users from existing capacity will deliver incremental savings to those remaining on the existing network.

However, what CMAP is proposing is tolling the new capacity, which creates two benefits. The obvious one is recovery of at least part of the capital cost of the new capacity. However, the more significant benefit is ensuring the new capacity is sustainable. I don't mean to use the word as a cliche, but rather than by having peak pricing, the new roads and the HOT lanes in particular, will be able to be managed to always have a minimum standard of free flow conditions with pricing managing demand.

Critics of any new highway capacity frequently claim that it induces demand so that it ends up being filled up and congested, much as the situation before it was built. Pricing that capacity manages this so that demand can be effectively capped by pricing off users for whom the marginal cost of the toll outweighs the marginal benefit of travelling on that road at that time.

In short, it is a way of ensuring new capacity, where and when it can be funded by the users, is optimally utilised.

It's worth noting that it appears CMAP has published findings and proposals largely to gauge reaction to them. The peak surcharge on tolled routes (i.e. not including the HOT lane only routes, where the alternative is free) would range from 25-83%, with a price surcharge of between US$0.05-US$0.09 per mile.

A map of the proposed network consists of:

Illinois Route 53 north extension and Illinois Route 120 bypass: A 12.5 mile long four lane parkway, with an operating speed limit of 45mph and all lanes priced, with peak pricing to maintain steady traffic flows.

Elgin-O'Hare West Bypass: Widening (from four to eight lanes) and extending the existing Elgin-O'Hare Expressway to a new north-south expressway at the western edge of O'Hare to connect I-90 and I-294. Modelling was on the basis of tollling all lanes including peak pricing.

I-90 Addams Tollway widening: A new lane to be added in each direction on the Addams Tollway from I-294 to Rockford, with those lanes being HOT lanes with peak pricing.

Travel time savings were expected to range from 11-25 minutes in the tolled lanes, and 4-9 minutes in the untolled lanes (with other time savings for the new corridors more related to a better route than pricing)

CMAP advocates the new "congestion pricing" (which is effectively tolls on new capacity with peak pricing, not congestion pricing as it is known elsewhere) as offering the typical benefits of tolled lanes, of new capacity and a choice of road users to pay for free flow conditions or to remain in congested traffic (which will be less congested given the impact of those making the choice to pay). It indicates that time savings in express lanes could be between 31% and 66% of existing travel times. In addition, it sees the express lanes as enhancing the attractiveness of bus services, as they effectively create new corridors for bus rapid transit services.

"The median income of express lane users would be 13 to 19 percent higher than users of the general purpose lanes -- somewhat higher, but not dramatically so" Astonishing that this issue comes up, given Americans are comfortable with wealthier people being more able to afford taxis, cars and first class air travel. Bear in mind the lanes are optional.

However, it floats some more ideas to address perceived distributional issues:

Policies should be adopted to address equity concerns. For example, transit vehicles could use express lanes for free, and surplus revenues from congestion pricing could be used to fund transit service. In another approach, drivers in the region could be given a base number of "lifeline" travel credits for free travel, then they would only pay for travel above that level. Another possible alternative is that lower-income drivers could be charged a discounted toll rate or be allowed to deduct tolls from congestion pricing on their state income taxes.

Free use by buses is fairly obvious, but having travel credits for free travel will destroy their usefulness in the initial period, as everyone uses their "free" credits early on. Having a low income discount is also fraught with problems, although deducting tolls from income taxes would be an interesting form of tax recycling. Yet none of this is necessarily. New toll routes or toll lanes don't disadvantage anyone, but offer a new opportunity.

Other concerns such as "traffic spillover" and "engineering feasibility" are manageable. If all such lanes are new capacity, the traffic effect would be generally positive, but engineering matters can be complex to allow for convenient access/egress from such lanes.

The "public acceptance" page indicates a majority of those surveyed are in favour of the option of tolled lanes that guarantee free flowing traffic conditions. Hopefully this will prove to be the case to encourage the proposal to proceed further.

Media Reports

Media coverage has been fairly open minded:

- Huffington Post Chicago has a short factual report and has video from ABC7 and strangely the BBC (talking about tolling in the UK), but also has an online survey of attitudes to toll lanes.

- Chicagoist is open minded about it, and claims "This is not a new idea. Mayor Rahm Emanuel previously proposed a downtown parking surcharge to help fund transit initiatives like a new Cermak / McCormick Place El stop and bus rapid transit routes along Jeffery, Western and Ashland avenues." Although parking surcharges bear little resemblance to toll lanes.

- Chicago Magazine titled its report "Why Congestion Pricing Works, and Why People Don’t Like It", gets the basic economics right and quotes the success of Singapore, but notes people don't always like others paying to get past a traffic jam. It has an interesting conclusion that helps people understand the tradeoffs being made, and notes that whatever people say, users of the untolled lanes get a benefit:

Let's assume you save 15 minutes on Mannheim. That's one-quarter hour, at $3.41. If you make $20 an hour, and value your commute at $10 an hour, it's not worth paying $3.41. It's close to worth it on I-55. But if you make $40 an hour, it's (theoretically) worth it. (I look forward to traffic reporters trying to integrate variable congestion pricing into their reports: "40 minutes to the Dan Ryan from 355 in the free lanes, 25 in the express lanes, which are running at eleven cents a mile right now.")

Is it unfair ? Sort of—the more you make, the more affordable it is, which is frustrating if you don't make much. But it also shaves time off the free lanes, which building more roads has never done.

- Radio Station WBEZ unsurprisingly mentioned London, even though there is little in common between London Congestion Charging and the Chicago proposal.

- ABC gave a fair report but indicated it "may be a tough sell to many who are weary of the higher cost of everything, including the most recent toll hikes" and that "Many public hearings ahead will determine the direction of travel". It noted that just building new untolled lanes is likely to not be sustainable.

It will be interesting to see if there is any significant opposition, and if not, if Chicago will start to advance these proposals. Bear in mind Chicago already has toll roads in the form of the Illinois Tollway, and the privately owned Chicago Skyway. If you combine the proposals for new roads and HOT lanes with these, you get the map I have hastily pulled together below. Red is for toll roads, both existing and proposed, yellow is for untolled roads with HOT lanes (one existing toll road, the I-90 Adams tollway is proposed to have a toll premium lane added, so that it costs yet more to use it compared to the existing toll road). (Note the state line immediately to the east for Indiana, as the Indiana Toll Road connects to the Chicago Skyway).

Toll roads and lanes in Chicago existing and proposed

If the proposals come to pass it will mean a great deal of major corridors in Chicago will have tolls, which starts to look like some form of network tolling.

As a footnote, perhaps one of the more interesting pieces of work on the website is a summary of "congestion pricing" across the United States. These examples include toll roads with peak pricing and HOT lanes, all with links to the websites about the current and planned projects. It's not a bad summary of such pricing in the US (there is only one example I know of HOT lanes outside the US, being in Israel).

4 comments:

I agree that pricing represents an invaluable tool in addressing urban congestion; however, it is entirely misleading to suggest that toll lanes don't disadvantage anyone.

Clearly, they do, and there is plenty of peer reviewed literature to support that representation.

This is particularly true where similar levels of investment are not being made in alternatives to paying the price. In order to offset the equity implications of pricing strategies, there needs to be a reliable, affordable, and efficient alternative. In urban areas that genrally translates into high quality transit; not busses running a short distance on a hot lane and then in mixed traffic to yield an unbearably long and unreliable trip, but genuine alternatives to driving.

Importantly, transit must be developed at the same time as priced-lane implementation, not at some ill-defined later date in a follow-on study with no identified funding source. Furthermore, revenues from pricing should support both highway and transit capital and operating in the corridor of travel.

Configured to benefit both highways and transit, equity implications are minimized or eliminated and both highway and tranit operating efficiencies are maximized.

Win-win. Unfortunately, pricing strategies are being positioned to lose - now that's disappointing as they hold a lot of promise.

Note my point was "new" toll lanes, as it offers additional capacity at a price. Those who do not use it, are not disadvantaged, unless the new lanes are not financially viable, in which case the disadvantage is disaggregated amongst millions of taxpayers. I am critical of the roll out of toll lanes which are essentially still subsidised new highway capacity.

Your point about the equity implications of pricing strategies is correct if this is about charging existing capacity and does not involve an offsetting reduction in other taxes. In such cases there can be some serious short term issues about access to employment for those who may be priced out of their jobs (in the long run if pricing is set efficiently, then it should result in relocation of economic activity and modest changes in wage patterns). It is a much touted myth that the response to pricing must always be an alternative publicly provided mode. It is simply not viable to always do this. There are alternatives such as better targeted pricing, discounts and offsetting tax reductions that are likely to deliver more efficient outcomes.

In the Chicago case it is not congestion pricing on existing capacity, so the equity issues do not arise. Those who drive now on existing capacity can continue to do so. Those who use public transit will do so, and may see an improvement if services use the tolled lanes.

There is a wider argument about the use of revenues from road pricing. Some argue that it should provide a pool of funding to support alternative modes, others argue that it can correct pricing distortions between modes allowing public transit to stand on its own financially (like virtually all other transport modes can do).

Where there exist disproportionate impacts and benefits across demographic groups, there are either vertical or horizontal equity problems, sometimes both, of course.

A new priced lane, alone, does not equally benefit all demographic groups, nor does it generate equal impacts amongst groups. At the same time, such lanes add very little economic value to the communities they pass through; there are opportunity costs.

As you may know, urban expressways slice through many low-to-moderate income neighborhoods exhibiting low vehicle ownership. Chicago is no exception. The Illinois Department of Transportation has identified regionally significant concentrations of such populations within their I-290 project area. There is a regionally significant employment center just 8 miles, or so, west of Chicago. It can take a car as little as 13 minutes to make the trip, or perhaps 35 minutes during peak traffic.

It can easily take a transit rider over two hours for the same trip. Therefore, the entry level retail and service jobs are not accessible to concentrations of unemployed and underemployed people and employers have difficulty filling the jobs. That is not a win for anyone.

What does one label the distribution of costs and benefits when an investment does not provide equal advantage to all (or even a majority) and, at the same time, both amplifies adverse impacts and presents opportunity costs to those not sharing in the benefits? Some would say it's an inequitable use of public resources, others might call it disadvantageous to broad swaths of the public, and yet others, like my grandfather, might just label it a billion-dollar boondoggle.

That is not how American will remain competitive in the 21st century.

We can't keep building billion dollar boondoggles designed and intended to serve a very small portion of the traveling public. This is an especially egregious error when one has abundant evidence gathered over 50 years of highway construction and expansion clearly illuminating the glaring fact that highway design and capacity enhancements, alone, no longer generate a positive return on investment. The highway trust fund is insolvent. The general fund is diverting money to it in an effort to keep it afloat. All the while, bridges collapse and drivers dodge potholes, etc.

We need to be thinking and investing in a much more coordinated fashion. We can't keep building out the most complex road network on the planet while allowing bike and transit networks to remain little better than a loosely connected group of cattle paths.

We need to effectively link investments to desirable outcomes, not some highway engineer’s constrained understanding of regional problems and what is needed to solve them, but multidisciplinary critical thought about relationships between land-use, transportation, and the economy. For instance, is a priced lane to benefit a few drivers in and of itself a desirable outcome for a staggering public investment? What regional outcomes does it support, and which does it undermine?

The goal attached to a billion dollar project can't be to help a tiny portion of the traveling public move a little faster than their counterparts stuck in even worse congestion than before.

The point, here, is not that road pricing is evil, or that highways are bad, but rather that in order to be effective in advancing regional goals, pricing absolutely must be combined with commensurate investments in the complimentary transit network. That necessarily involves revenue sharing, as well.

Surely you jest that a new priced lane generates equal benefits for all and avoids disproportionate impacts for others . . .

I can't imagine there being a single government intervention in any area that wouldn't have disproportionate impacts across groups - by definition virtually all government actions mean some extract rents, others face costs. You can't avoid that, it becomes a political and philosophical question about what is equitable.

A new lane on an existing highway or the conversion of a HOV lane to a tolled lane will have minimal impact upon those living adjacent to the highway. There are serious issues about the use of eminent domain to take land for public (let alone private use)- and I am highly critical of running roughshod over private property rights in such a way (particularly for private developments, but that's another story).

There are approaches taken elsewhere to deal with the effects of building new highways on those adjacent to it. In France, the state and private highway developers, and the national rail network operator, offer land owners double market value to buy up the corridors, so get multiple offers, and then choose the best option for building the corridor. Taking a proper commercial cost accounting approach to these costs means that projects can be evaluated based on returning these land costs over a very long period. I know the US remains in the dark ages compared to many in treating highways as depreciated assets. It doesn't help that the US also runs publicly owned transit monopolies that deliver service standards well below those of commercial privately owned (and publicly owned) operators in Europe and Australasia. It should be entirely feasible for anyone to set up a competing operation with a few buses to meet demand or generate demand.

You're right there needs to be a more fundamental look at the whole system. The bankruptcy of the Federal (and some state) highway trust funds needs to be addressed, and maintenance/renewal of existing networks should be a priority - but it needs to be depoliticised, and to be put on a more rational funding system that secures revenue for the longer term. I admit that I am unsure why, if there is efficient pricing of highways, that urban public transit can't also be self sustaining - given that intercity public transport is (when you ignore Amtrak outside the north-eastern corridor).

I don't believe a priced lane generates equal benefits for all, but I don't believe that a conversion of a HOT lane is negative for anyone (except HOV users on the margins). If a new lane is financially viable on an existing corridor, then as long as it doesn't infringe upon the property rights of others, I see little reason to oppose it.

However, it is clear that the enthusiasm for HOT lanes is somewhat of a short term distraction from the absence of a long term strategy for highways.

Subscribe To

Search This Blog

Loading...

What is road pricing?

Road pricing is any system that directly charges motorists for the use of a road or network of roads. Traditionally it has meant tolls on single routes, particularly crossings such as bridges or tunnels. More recently it also includes area, cordon and zone pricing of urban areas, and distance and time based charging of whole networks. It does not include fuel or tyre taxes, or taxes on ownership or purchase of road vehicles.